New Takes on the Sad Shape We Are In

For some time, I have been interested in the increasingly sad plight of our polity: ever increasing economic equality, the implosion of the government in response to crises and the general decay of our political and civic life. Recently, Jeffrey D. Sachs, noted economist and now director of the Earth Institute at Columbia University, published, “The Price of civilization: Reawakening American Virtue and Prosperity,” and Larry Lessig, noted professor of law and director of the Edmond J. Safra Foundation Center for Ethics at Harvard, published, “Republic, Lost: How Money Corrupts Congress –and a Plan to Stop It.” Both look to our current plight and both start from the same place: The extreme negative effect extreme wealth has on our political system. Sachs characterizes political power as actually being held by a “duopoly:” “[T]he only difference between the Republicans and Democrats is that Big Oil owns the Republicans while Wall Street owns the Democrats.” For Lessig, government policy to advance the interests of the people is consistently thwarted: “Change on the Left gets stopped because strong, powerful private interests use their leverage to block changes in the status quo. Change on the Right gets stopped . . . because Congress works to block any change that would weaken the fund-raising machine.” Sachs juxtaposes what the government does with the following widely shared values of the American people: 1. “equality of opportunity, 2. “individuals should make the maximum efforts to help themselves,” 3. tthe government should help those in need as long as they are trying to help themselves,” and 4. “the rich should pay more in taxes.”

Lessig differentiates among the rich. His focus is on the rich “whose power comes not from hard work, creativity, innovation, or the creation of wealth [but] who instead secure their wealth through the manipulation of government and politicians.” In Lessig’s view the influence of money in campaign financing and lobbying from the wealthiest interests is corrupting even if it is not illegal. Democracy has become “a show or ruse” that has resulted in the loss of faith and trust in our system of government. For one example, Lessig quotes studies showing that “from 1998 to 2008, the financial sector spent $1.7 billion on campaign contributions and $3.4 billion on lobbying expenses.” He finds it “impossible to believe that our government would have been this stupid [in allowing the financial services industry to run the economy off the rails] had congressmen from both sides of the aisle not been so desperate” for campaign contributions and the money spent lobbying. The American people overwhelmingly think that the government is corrupt and in the hands of the rich and powerful. Presently, only 11% of the people have confidence in Congress.

Sachs traces the beginning of the collapse of American virtue to the Reagan Revolution that created “a new antipathy to the role of government, a new disdain for the poor . . . and a new invitation to the rich to shed their moral responsibilities to the rest of society.” The “extreme libertarianism” that followed has “unleash[ed] greed.” He analyzes the consequences of the Civil Rights Movement and the backlash it produced, the rise in the Hispanic population and the rise of the Sunbelt and of suburbanization. Sachs pinpoints the main impact of economic globalization to be that it has cause a “a tremendous and rapidly expanding range of sophisticated economic activities that once were carried out only the United States, Europe, and Japan can now be carried out even more profitably in China, India, Brazil and elsewhere.” Not only does globalization impact national economies, it has an impact within them as well. “High-skilled (and therefore high-income) workers are likely to benefit. . . while low-skilled (and therefore low-income) workers are likely to feel the pressure of tougher competition from abroad.” With the resulting increase in the wealth of those at top while they have turned their backs on the rest of society has produced our present politics that is so disassociated from the needs, interests and values of the vast majority of Americans.

To regain prosperity and a vibrant society, Sachs says we need to set some specific short term goals: 5% unemployment by 2015, 50% of those between age 25 and 29 to have college degrees by 2020, with academic performance established using global benchmarks, by 2015, every child should be enrolled in comprehensive early childhood development programs, ensuring nutritional monitoring, safe day care, and quality preschool. He calculates the cost of these short term as well as longer term goals concerning the deficit, the environment and other issues that need to be addressed in the longer term. Sachs further demonstrates that these goals cannot be achieved by budget cutting alone. So for him it is “time for the rich to pay their due” and that would produce enough revenue to meet our goals without creating any sort of hardship on wealthy taxpayers.

To end the grip that the “corporatocracy” has on government, Sachs proposes public campaign financing, free media time for elections, banning campaign contributions from lobbying firms, stopping the “revolving door” and taking away the government “trough” for corporate interests. The problem is, of course, how to get from here to there.

Lessig suggests a number of possible strategies to reduce the impact of money on politics: First, There should be primary election challenges to incumbents by “citizen politicians” who do not want the job but will stay in the race until the other candidates commit exclusively to public financing. Second, a presidential candidate could pledges that, if elected, “she will (1) hold the government hostage until Congress enacts a program to remove the fundamental corruption that is our government, and (2) once that program is enacted, she will resign.” Given the slight chance these two strategies have of being adopted, Lessig proposes a Constitutional Convention to force reform onto our system. Even if this final step is taken, it is not clear whether money could be taken out of politics.

The emergence of these extreme critiques of the present plight of the United States by people at elite institutions reflects a groundswell that real change is necessary if we are to stop our decline. Sachs and Lessig show how deeply entrenched the defects are that are destroying the nation. Their proposed solutions also demonstrate how difficult real change will be to end the corruption of our government resulting from the hold that big money has on it. Holding a constitutional convention in face of some of the proposals being bandied about by groups such as the Tea Party would be extremely risky but our situation may be so tenuous that the risk must be taken.

To Ken: I have to agree that these proposal fall far short of being likely to be adopted in the present environment. But, things are changing quite rapidly. What has impressed me is that there is so much more emphasis on this problem than there was just a short time ago.

To Patrick: I guess I used the term “extreme” here because these authors analyze our polity in ways that are so different from what we hear from Washington and Big Media and they propose remedies that Ken describes as so unlikely as to be pie-in-the-ski.

Both books are very important, and I agree with your diagnosis of crisis. I tend to think the approach of Alasdair MacIntyre toward the end of After Virtue may be more advisable, at least on an individual level.

Lessig’s book is fantastic as diagnosis, but I was a bit incredulous to hear him say (on the McChesney show podcast) that, had Obama vetoed the earmark-laden Democratic Congress budget in 2009, he’d have led the Tea Party.

Apropos of ” the rich ‘whose power comes not from hard work, creativity, innovation, or the creation of wealth [but] who instead secure their wealth through the manipulation of government and politicians’” (emphasis added): so, e.g., the rich who manipulate share prices, thereby “creating wealth” for themselves and other shareholders, are the good rich?

I don’t have much hope for these proposed reforms going anywhere until there is a deep re-think in the US about what “wealth” really is. We also need some soul-searching about whether the neoclassical economics orthodoxy (whose fundamentals are still clung to even by “good guys” like Sen and Stiglitz, to say nothing of Krugman, Sachs, etc.) can lead us down any better path from the one we’re on now.

Jobs is probably also covered by “creativity” and “innovation,” and the clause is a disjunction rather than a conjunction. And of course, “creation of wealth” is a cliché, so Lessig doesn’t own its meaning. As with many feel-good clichés, it sounds unassailable, but is deeply ambiguous. In the individual sense, it often means getting passive income (see, e.g., Robert G. Allen’s 1986 Creating Wealth, and innumerable blogs since then). In the financial press, it typically means what the financial industry does — these days often expressed through its opposite, as in Blackstone CEO Stephen Schwartzman’s comment a couple years ago, “Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half. This is absolutely unprecedented in our lifetime.” In a more general sense, it’s based on the aggregate prices people pay for stuff (the raw data of GDP), which is then sometimes averaged over an entire population without regard to distribution; this also means that a nation’s rich, who are willing to pay higher prices, are capable of creating more “wealth” than other folks. Even in this somewhat heterodox view, or at least self-critique of the conventional characterization of “wealth” as sales prices or market cap: http://economix.blogs.nytimes.com/2010/05/07/how-businesses-create-wealth/ it’s something quantifiable and expressible in money terms. That’s a far cry from what Socrates (see Xenophon’s Oeconomicus) or Aristotle (in the Politics would have called wealth, for example. And it’s why we need a re-think.